UNU-MERIT Working Papers Series

Twin transition trade based on multi-dimensional economic complexity

Mercedes Menéndez De Medina #2024-032

Trade worldwide is being reshaped by two major megatrends: advanced digitalization of production and the transition towards environmentally sustainable goods. This chapter examines for the first time the perspective of twin transition export and import diversification within a multi-dimensional economic complexity approach (Nomaler & Verspagen, 2024b, 2024d) and investigate whether this type of productive transformation perpetuates path-dependency processes in 80 countries over 2000-2018. The results suggest that an export/import productive structure based on twin transition products exhibit different economic performance, sustainability, and inequality implications. Productive specialization in these products has been very path-dependent and with a low engagement of developing countries and hence, reinforcing the core-periphery trade division. Furthermore, results suggest that developments in digital and green technological paradigms mainly take place in a selected number of countries that are already highly developed.

JEL Classification: F14, O10, Q01

Keywords: multi-dimensional economic complexity, canonical correspondence analysis, twin transition, sustainable development

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